NZDUSD: Steep Bullish Momentum Continues as Pair Reaches .8638 Near 12-month High
The daily candle chart below shows the New Zealand Dollar (NZD) versus the United States Dollar (USD) over the medium term and trading near .8624 (as of publication). This currency pair is known as NZDUSD, and just off today's high of .8638 which is the highest the pair has traded since April 11th 2013.
The Bullish momentum over the medium term has been characterized by a series of short term up-trends followed by smaller corrections, allowing the pair to make its way higher after recent steep bullish momentum pushed NZDUSD above .8600 earlier in today's trading session.
Last time the pair was covered in the Ideas You Can Trade series, a long term bearish resistance line was nearing but the pair had fell short of reaching that target, that line however was today overcome after it provided brief resistance on March 13th, just 5 days ago and then had enough today to push through it just hours earlier.
If the pair can hold above .8600, then a new 12-month high could follow, whereas a failure to hold this line which also coincides with the medium term bearish resistance line (point 6 in red on chart) could provide for another correction.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8651 with a Limit to take profit @ .8689 and a stop-loss @ .8631 Risk/Reward Summary: Limit risk = +38 pips profit / (-20) Stop-loss risk =Gain to Loss ratio = 1.90
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8576 with a Limit to take profit @ .8546 and a stop-loss @ .8599 Risk/Reward Summary: Limit risk = +30 pips profit / (-23) Stop-loss risk =Gain to Loss Ratio = 1.30
Medium term daily candle chart: